Taken by: Scott Graham
As college students, we are thinking about what test we have next or what football games we have planned. But some may question what happens after all of that. Saving for the future is now made super easy with these few tips.
What is an IRA?
Well, first off, IRA stands for Individual Retirement Account. Individual retirement accounts are retirement savings accounts that offer tax benefits and various investment options. Many investors use IRAs as their source of saving for retirement. Even those with access to employer-sponsored plans still tap into IRA tax advantages to add to their savings. Three types of IRAs exist Traditional, Roth, and 401(k). Traditional and Roth differ because Traditional IRAs are not taxed until retirement. Roth IRAs have taxes pulled for a tax-free retirement. Then there are the employment-sponsored plans such as 401(k). This is where whatever you put into retirement, your employer will match by a certain percentage. For instance, say you put 20 dollars in your 401(k) with a 3% match. Your employer then puts in 3% of what you gave. That’s an extra 6 cents. Which doesn’t seem like much, but it adds up. Also, that is why you would try to put in more money each month.
Why start saving now?
It is never too late to start saving. Putting money in now can help you not have to put in as much later on. I’m not saying you have to put in 1,000 dollars right now, but adding a Roth payment into your budget every month can help. Maybe put in 5-10 percent of each paycheck. There are many apps to help you start a retirement plan. I hope these tips can help you start saving for your future!
